Beyond BRICS, and Why Dubai Doesn’t Suck

WHY YOU SHOULD CARE

Because Parag Khanna is one of the sharpest futurists we know.

January 30, 2015

Parag Khanna, 37, has had a fascinating career — from being Gen. Stanley McChrystal’s strategic sherpa in Iraq and Afghanistan to writing international best-sellers on globalization. A new book is on the way — Mapping the Future — and Khanna, based in Singapore, is currently a senior fellow at the New America Foundation. Earlier this year, OZY got on the phone with Khanna to discuss what we’re missing about China, why the term BRICS (the emerging economies of Brazil, Russia, India, China and South Africa) is so over and why, haters be damned, Dubai is excellent.

OZY: What are the next BRICS?

Parag Khanna: Ah, my favorite question to hate. BRICS didn’t make much sense to begin with, but at least by now the concept has imploded upon itself, so I no longer need to argue [that] it’s a meaningless concept.

OZY: Why meaningless?

PK: I believe the world is headed toward clusters of economic regions rather than individual nation-states. Think about the Gulf Cooperation Council [composed of six Persian Gulf states, including Qatar and Saudi Arabia] — in a way, it’s a BRIC unto itself. The other regional cluster I’d add is ASEAN [the Association of Southeast Asian Nations], which is literally now the third-most populous economic zone in the world, behind China and India. We shouldn’t be thinking in terms of BRICS but in regional acronyms.

The World Economic Forum and Davos [the WEF’s annual meeting], which just happened last week, are representative of this shift. The WEF holds a dozen major regional summits a year, sort of like mini-Davoses. And at Davos itself, I’ve seen regional topics become much more prominent over the past decade.

OZY: Speaking of China, what do mainstream discussions miss about it?

PK: This is an easy one. We think about greenhouse gas emissions from the standpoint of countries rather than industries, but of course a large part of China’s greenhouse gas consumption is from factories that are producing stuff for consumers in … Western countries. Some 25 percent of China’s emissions relate to exports. That means that you, me, all of us are responsible for those emissions. Same with water consumption and agricultural commodities. China is diverting all these rivers, but if you’re saying the Chinese shouldn’t use so much water, then you’re basically saying Africans shouldn’t eat the food.

So we should be thinking about global warming in terms of industries and not countries. If you have a climate summit, and Malawi has signed an agreement to reduce its emissions, well, it doesn’t mean a lot. The way you would do it is by sector, not by countries. Within airlines, for instance, with carbon fiber aircraft that consume less fuel. Or sustainable cement production — just the fuel required to churn cement is one of the greatest producers of greenhouse gases in the world. In other words, let’s not solve the climate crisis in parliaments. Let’s solve it through supply chains.

Parag Khanna in Brussels in 2012.

Source David Plas

OZY: What are some of the most interesting opportunities in the global economy?

PK: There is this looming sense around the world that people are going to lose their jobs to automation. But the world’s largest employment sectors, the biggest job creators, are construction, hospitality, health care and education. Can you name me a robot that builds buildings, or teaches kids, or makes beds in hotels, or delivers medical care? I can’t. So this whole notion of a global automation crisis is intellectually very disingenuous. Most people don’t need to remotely worry about robots taking over their jobs.

The big opportunity, then, is to invest in these people-centric sectors — like health care and hospitality and construction — because they’re the biggest opportunities for employment growth and nation building.

OZY: What about if you’re a worker — say, if you’re in the lower-middle class: Where in the world do you have the best chance of climbing the economic ladder?

PK: The answer to the question isn’t where in the world, per se. The answer is: Move to the city. The vast improvement of quality of life we’ve seen in China and India has also been driven by rapid urbanization — along with the opening of economies and special economic zones.

OZY: Why is a city or a special economic zone an empowering structure, instead of a vulnerable one?

PK: It’s been mixed, of course, and diversification is critical. But beyond a doubt, your best bet for mobility is to move to a place where you’ll get work in a global supply chain. And that’s usually the city or a special economic zone. If you look at the entire story of Shenzhen’s rise, it’s the story of a special economic zone.

Today, the world’s demographic magnet is Dubai. It’s got the fastest-growing population in the whole world and it’s the most diverse city in the whole world. Less than 10 percent is the indigenous population. So it’s truly the global melting pot. A lot of people hate Dubai for aesthetic reasons, but where else will you find Africans and South Asians and other Arabs — as well as more than half a million Europeans — seeking shelter from the financial crisis?

The last time I was there, the place was flooded with Portuguese and Spanish kids who’d bought one-way tickets on EasyJet, and were competing with Jordanians for jobs as waiters — and if you spend even one moment in Portugal these days, why would that surprise you at all? Dubai is where you go if you can’t stay in your homeland, but it’s a step up for millions of people, including people from the West.